If you want gigabit Internet speeds at an affordable price, you have to go with Google (NASDAQ: GOOG) Fiber. That means moving to Kansas City, or, if you're more patient, to Provo, Utah, or Austin, Texas.
Not so fast. As it turns out, gigabit services are popping up all over the place. If Google wanted to prod the competition into action, the experiment seems to be working.
This week, a small town in Minneapolis joined the club. Every home in Twin Cities exurb Melrose, Minn., has access to fiber-optic cables from local telecom Arvig. The $300 gigabit package is a bit more costly than Google Fiber's typical $70 monthly fee. In fact, that pricing per megabit is in line with the fastest Verizon (NYSE: VZ) FiOS service available, a 300-megabit package for $210 per month.
But don't write off Arvig's service as irrelevant quite yet. Verizon's upload service tops out at 65 megabits, while the Arvig deal offers gigabit speeds in both directions, so you're getting more two-way speed for your money. It's also hard to argue with the much higher top speed, which is augmented by cheaper and slower alternatives. At the low end, you'd pay $20 a month for a 20-megabit service, which is a very respectable low-end offering. And of course, Verizon doesn't serve Melrose. Or Minneapolis, for that matter. Arvig plans to eventually bring a similar service to the core of the Twin Cities.
But that's just the latest example of a nationwide groundswell.
A few neighborhoods in Seattle will get gigabit services next year, at prices comparable to Google Fiber's. Big G has nothing to do with this installation. It's managed by Gigabit Squared, a private company that hopes to provide a high-speed networking template for others to follow. That means implementing gigabit services at a reasonable cost, and proving to the skeptics that the business model still works.
Gigabit Squared has also announced services in Chicago. The company powers these installations by hooking into the ultrafast Gig.U backbone. That's a high-speed network that connects about three dozen research universities to the Internet. That's one way to ensure a robust backbone connection, and it makes sense to serve the data-hungry college towns around major research centers. After all, Google's Internet services started with a fiber network around Stanford. You gotta walk the campus before you can run across big cities.
But you don't have to be big or connected to a major college, in order to make gigabit services work. Privately held Vermont Telephone offers gigabit speeds for as little as $30 a month to its minuscule market of 17,500 customers. That's mostly in rural areas, no less.
And that's not all. Skip across the border to Vancouver, Canada, and you'll find a city with two competing gigabit services. Competition for affordable gigabit broadband? Perish the thought!
In Vancouver, it's an upstart called OneGigabit going head to head with Canadian giant Shaw Communications (NYSE: SJR). Shaw offers gigabit speeds to "pockets" of Vancouver. OneGigabit focuses on condos and apartment buildings, where the cost of installing infrastructure once to multiple customers makes more sense. This service will be cheaper than Google's.
So there's a vibrant trend of small-scale gigabit services popping up. And the big boys are taking notice.
AT&T (NYSE: T) responded to Google Fiber's entrance in Austin with its own gigabit offering. Comcast (NASDAQ: CMCSA) is going door to door in rural Vermont, looking to reclaim VTel's gigabit customers with reasonable speeds and low costs.
Google never meant to become America's preferred Internet service provider. Google Fiber is doing its job by encouraging upstarts to charge into the wide open high-speed space, and by pressuring the incumbents to raise speeds while lowering prices. With any luck, the effects will spread across the nation and lead to stronger competition.
Telecoms and cable guys may have to accept lower profit margins on their lucrative Internet packages when all is said and done. The obvious winner here is the consumer, and then Google reaps the rewards of more ad clicks.
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